The Labour backbencher, a long-standing critic of the profession, said the scandal revealed how the ?accountancy trade associations? and successive governments had ignored money laundering.

He made his comments in a 54-page analysis of the institute?s investigation into allegations that Italian oil company Agip was at the centre of a major fraud. Mitchell claimed the affair, which took place in the early 1980s, revealed a major money-laundering scam.

He said the institute failed to investigate the allegations before declaring ?there was no case to answer? against the accountants connected with the affair.

An institute spokeswoman rebutted Mitchell?s claims, and said they had been overtaken by events and were no longer relevant. She said the UK government and EU had overhauled money-laundering regulations, and the institute had reviewed its disciplinary procedures.

She added most accountants were aware of the need to report suspicious movements of money, so ?cases like this are much less likely to arise now?.